Marquis Macadamias increases marketing to arrest nut price slide

But even as global pandemic restrictions ease, growers shouldn't expect a quick return to the lucrative prices of recent years.

Macadamia growers have watched on nervously in the past fortnight as the latest season price offerings from processors slid to below $3 per kilogram, a long way from the $6/kg offering of recent years which made it the darling of the tree nut industry.

Marquis Macadamias' most recent offering is $2.90/kg, the result of a mix of global factors according to outgoing chief executive officer Larry McHugh.

"Obviously we are very concerned for growers now that the price has gone down. It needs to be better to sustain growers in the long term but we've seen these dips before back in 1991, 1999 and 2006," Mr McHugh said.

"It's been a long time, when you think from 2006 to 2022, since we've seen a dip.

"Each time we've recovered and the industry knows what to do to recover, so this perfect storm has thrown us into a dip again."

COVID-19, the war in Europe, higher shipping expenses, rising interest rates and increasing fuel costs all contributed to the tighter margins for the processor.

Added to this was the "final straw" of a larger than expected global macadamia crop.

"It was a little bit unexpected. South Africa came out in September and moved their crop up 19 per cent; moved it up 11,000 tonnes," Mr McHugh said.

He said the entire world crop is about 50,000t (20pc) larger than last year's crop.

Marquis itself is half South African grower-owned but has extensive orchards in Australia in areas such as Lismore, NSW and Bundaberg, Qld.

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The company processes 22,000t per annum in Australia and 18,000t per annum through Marquis Macadamias Africa.

Mr McHugh said in a market that was already stocked, it caused the prices to fall even further.

"There has just been a gradual erosion of prices over the years with more product on the market and processors looking for cash flow and trying to bring new people in and a lack of product development," he said.

"During COVID there was very little product development going on around the world."

With the closure of many food outlets during the past two years, a backlog of product built up.

"In Europe there is fairly bad consumer sentiment at the moment. Demand is slowing down," he said.

The Australian Macadamia Society (AMS) actually reduced its crop forecast in September, saying it expected a crop of 49,340 tonnes in-shell (3.5 per cent moisture), down from the original forecast of 54,930 tonnes in-shell (3.5pc moisture) following severe weather and flooding in NSW and south east Queensland.

ONE of the big things going for macadamias is the consumer love for the product around the world.

Longer term, the current glut may actually reap benefits with more product available at a lower price for manufacturers to make the most of.

"The industry has always had this problem until recently that we've actually not had enough supply to build a big market out there," Mr McHugh said.

He said large scale food makers such as Nestle and Cadbury have traditionally required a consistent supply to be able to launch new products.

The Marquis Macadamias marketing team is currently meeting with such companies encouraging them to embrace the opportunity.

IN terms of other countries pumping out macadamia nuts, the once hard-to-read Chinese industry has been more forthcoming with data of late.

Mr McHugh said China's crop went from 30,000 to 50,000 tonnes, with expectations it will grow at about 10,000t per year.

"If we know about it, we can do something about it," he said.

That said, China is consuming much of its own production.

For potential new markets, Mr McHugh said India stands as a land of possibility, particularly with the signing of the Australia-India Free Trade Agreement earlier this year.

The 32pc duty on macadamias to India will be eliminated over seven years.

"I think India is probably the next big market that the industry has to tackle," he said.

"It's a nut-eating country so it really fits well."

According to the World Macadamia Organisation, launched in September 2021, macadamia supply will double in the next four to five years, and triple within a decade.

"By 2030 the industry is forecasting global supply will reach up to 660,000 metric tonnes," the WMO said.

"Even taking into account this projected growth, macadamias are still expected to account for only one percent of all tree nuts."

THE way out of the slump, according to Mr McHugh depends on three words: marketing, marketing and marketing.

"We are a grower-owned business and we are striving hard to build market, and that's really where we are concentrating at the moment - marketing, marketing and more marketing is really the only way out of this situation," he said.

"That's what we'll be focussing on. I'd just encourage the growers to stick with us and we'll come out the other side and we'll be in a good place again."

The global macadamia industry, largely led by the AMS, has focused on positioning the product as a premium value-added ingredient to items such as cereal, ice-cream, muesli bars, biscuits and chocolates.

"We've got to get out there and build those markets and the fact that the AMS is talking about it shows that we've known this is coming for a while but it's been very difficult to get anything moving during COVID, so having a big crop has not helped the situation at all," he said.

"The only difference between this time round and 1991, 1999 and 2006 is that the world crop is also growing rapidly at the moment."

Mr McHugh said it may take a few years to get out of the price slump.

He said prices may not go back to the heady heights of three or four years ago but they will definitely move back up again.

"The fact is it has to remain in an area where the world crop can be sold and I think macadamias will always be a premium nut but not quite the premium nut it has been," he said.

THE slowing market has not deterred Marqus Macadamias' expansion proposal however.

Plans are underway for a multi-million-dollar add-on to its Bundaberg processing facility at a total cost of $40 million once all three stages are complete.

This will include a new delivery area as well as drying and storage for an additional 4800 tonnes of nut-in-shell (NIS).

The plans also include the development of a solar farm, a new warehouse and production area, plus two additional storage buildings.

It is not uncommon for macadamia processors such as Marquis Macadamias to transport nuts (in shell) to be stored in spare silos in cooler climate areas such as Dalby and Kingaroy, during winter.

The transport costs associated with such handling heightens the need for further capital investment, according to Mr McHugh.

The introduction of tree shakers to the industry has also meant the crop is coming in a lot quicker than it used to.

"There is not enough processing capacity in Australia to deal with the crop that's in the ground now," he said.

"For growers to still continue to have profitable businesses, we actually need to grow the processing plant to be able to handle more of the crop.

"We are still painfully aware also that we need to get growers enough money to get across this lower price period.

"So it's a balance between capital expenditure and getting enough money to our growers."